Let’s face it. Advertising terms can be confusing.
Especially if you’re one of those “i’d-rather-poke-myself-in-the-eye-than-do-anything-that-has-to-with-math” kind of people.
But if you’re looking to turn your food blog into your career (or even just your mocha money) then it’s important that you have a solid understanding of advertising terminology.
The good news is that the most common advertising terms are fairly simple to understand, especially if you have examples to look at. In this post we’re going to look at seven different advertising terms and explain them using simple and easy to understand examples. The advertising terms we’ll be looking at today are:
Our Example Blog
Throughout this post we’ll be using a fictitious food blog called Yum Yum Tummy. Here are the stats for this fictitious food blog:
- Page views: 1,000
- Number of ads: 3
- Number of ads that have been clicked: 5
- Number of products purchased: 1
Impression: Anytime an individual ad is displayed to a visitor on your website.
The key word in that definition is individual. Every time an individual ad unit shows an ad it’s counted as an impression.
With our example food blog, Yum Yum Tummy, we have 3 total ad units. If a visitor came and looked at a single page on our blog it could potentially result in 3 impressions.
We could also say that the 1,000 page views we have on our blog could potentially result in 3,000 impressions.
1,000 page views x 3 ad units = 3,000 potential impressions
I say potentially because we have to factor in the ad network’s fill rate.
2. Fill Rate
Fill Rate: The number of times an ad is displayed divided by the number of times an ad could be displayed.
Here’s how that works with our example blog. As we talked about before, we have 1,000 page views and 3 ads on our website. That means we have the potential for 3,000 impressions.
However, it’s very rare for an ad network to have a 100% fill rate.
Let’s pretend we’re working with a fictitious ad network called Fooder Inc. We know that Fooder Inc. has a fill rate of 60% this month. Using our stats and this fill rate we can assume that we’ll have around 1,800 impressions.
(1,000 page views x 3 ads) * 60% fill rate = 1,800 impressions
That means we have 1,200 possible impressions that won’t be filled. What happens to this remnant space? It depends on the ad network.
Some ad networks show very low earning ads while others show public service ads (PSAs) for organizations like Charity Water or the American Cancer Society. Your ad network should have no issue with telling you what they do with remnant space, so be sure to contact them if you’re not sure what’s currently happening with your ad units.
CPM: Cost per 1000 impressions.
So how much can our blog earn from those 1,800 impressions? If we’re using a CPM based ad network then we need to know what the CPM rate is to figure out how much income our blog will earn.
Let’s continue to use Fooder Inc. as our imaginary CPM based ad network. Last month the CPM for Fooder Inc. averaged out to $2. That means our 1,800 impressions will earn us a total of $3.60.
1.8 thousand impressions x $2 CPM = $3.60 income
A few important things to know about CPM advertising:
- There are peaks and valleys in the advertising cycle. The beginning of the year typically has lower numbers and the end of the year typically has higher numbers.
- Ad networks will sometimes provide a higher CPM number that represents the total CPM that they’re getting from the advertiser. Make sure you understand what your cut of that CPM number is. For instance, if an ad network says they get a $6 CPM, but your cut is 50%, then you’re actual CPM is $3.
- Always remember to factor in the fill rate. A $5 CPM isn’t that great if the fill rate is only 10%.
The key to increasing your income with CPM based advertising is (1) increasing your traffic and (2) finding the ad network with the highest CPMs.
CPC: Cost per click.
When learning about CPM we pretended that we were working with a CPM advertiser. We’re now going to pretend that we’re working with a fictitious CPC advertiser called Clickster Inc.
So how much can our blog earn from those 1,800 impressions if we’re using Clickster Inc. as our advertiser? It depends on how many people end up clicking on an ad.
Our 1,800 impressions could make us zero dollars if we’re using a CPC advertisers and no one clicks on an ad. We could even have 1,800,000 impressions and still not make anything if we don’t have anyone clicking on the ad.
CPC is all about the click. The more clicks you get the more potential income you can make from your blog.
In our example stats we had 1,000 page views, 3 ad units, and 5 total ads clicked. Let’s pretend the CPC rate for those ads is $1. That would mean that we would earn a total of $5.
5 ads clicked x $1 CPC = $5 income
The key to increasing your income with CPC based advertising is to get more people to click on your ads. The issue with this is that the best way to increase clicks is to place ads in places where people are more likely to see them, like in the middle of your blog post. This creates a poor user experience for your readers.
A few important things to know about CPC advertising:
- Never try and earn a quick buck by clicking on your own ad. The ad networks are smart and it’s almost guaranteed they’ll catch invalid clicks.
- Most CPC ad networks don’t have stringent rules requiring ads to be placed above the fold. Try experimenting with CPC ads in places where CPM ads might not be able to be placed, like at the bottom of a sidebar or above the comments section of a post.
- Some CPM networks will let you use ad networks like Google AdSense to backfill any impressions that the CPM network doesn’t fill. Make sure you continue to follow the CPC rules for these type of situations. FBP member Maria had a great question about this and helped me understand these rules better. You check out the conversation we had on this conversation thread.
CPA: Cost per acquisition.
Cost per acquisition is a type of advertising where you (the blogger) are paid when a visitor clicks on an ad and purchases (or signs up) for a product. A common type of CPA advertising is affiliate marketing. With affiliate marketing you’re only paid if someone ends up purchasing the product that was advertised.
If we look at our Yum Yum Tummy stats we know that we had 1,800 impressions, 5 clicks, and 1 product purchased. If our ads were CPA based ads then the only stat that matters is how many products were purchased.
Let’s pretend that the ads we were running were for the BlendTec affiliate program. BlendTec pays a 15% commission rate. Let’s pretend the product that was purchased was a $500 blender. We would end up earning a total of $75.
15% CPA commission x $500 price of product = $75 income
It might be easy to see that number and think that you should just switch all your ads to CPA ads because the payout is higher. However, the reality is that affiliate marketing isn’t as easy at it seems. You have to have a good understanding of the process and make sure that you’re using affiliate links in the right place throughout your blog.
FBP Members: If you want to learn more about effective affiliate marketing check out the Affiliate Marketing course in the Generating Income series.
CTR: Click through rate.
Click through rate can be found by taking the number of clicks divided by the number of page views. It’s an important concept to understand because it’s used a lot in internet marketing, so make sure you take your time with this one.
Nerd Note: It’s also possible to calculate CTR by taking the number of clicks divided by the number of impressions, but in this example we’ll be using page views.
We know that Yum Yum Tummy had 5 clicks on 1,000 page views, so our CTR would be 0.005%.
5 clicks / 1,000 page views = 0.005% CTR
With CPC and CPA based advertising one of the ways to increase your income is by finding ways to increase your CTR. One of the most common ways to increase CTR is by performing split testing. We won’t go over that right now, but it’s definitely something you should look into if you’re serious about monetizing your food blog.
RPM: Page revenue per thousand impressions.
RPM shows you how much you make from every 1,000 page views on your blog. It’s commonly used to measure the performance of your ads, but I like to use it to measure the overall effectiveness of a site’s income generation. The equation looks like this:
(Total revenue / Number of page views) * 1000 = Page RPM
Let’s move away from our example food blog and use Pinch of Yum’s traffic and revenue from the November 2013 Traffic and Income Report and the December 2013 Traffic and Income Report.
- Revenue: $15,363.75
- Page views: 1,428,175
- RPM: $10.76
($15,363.75 revenue / 1,428,175 page views) * 1,000 = $10.76 RPM
- Revenue: $19,829.98
- Page views: 1,294,900
- RPM: $15.31
($19,829.98 revenue / 1,294,900 page views) * 1,000 = $15.31 RPM
Wow! The RPM is drastically different.
December was a much better month compared to November. When looking at these numbers we can see that in December we earned almost $5 more for everyone 1,000 page views when compared to November.
Increasing your blog’s overall RPM is one of the most important things you can do to increase your income as a food blogger.
And the best part about RPM is that you don’t have to increase your blog’s traffic in order to increase your RPM.
So how exactly do you go about increasing your blog’s RPM?
Here are a few ideas:
- Create free and helpful posts that end with an “up sell” for one of your products. Check out Lindsay’s posts about food photography for an example of what that could look like. At the bottom of almost all of those posts is a blurb about Tasty Food Photography, Lindsay’s food photography eBook.
- Sign up to be an affiliate for products you use and create a “resources” page on your blog that contains those affiliate links.
- Monetize your recipes with services like Chicory and Swoop.
How about you? What’s one idea you have for increasing your blog’s RPM?
There we have it: impression, fill rate, CPM, CPC, CTR, CPA, and RPM. Seven simple advertising terms that will help you leverage the earning potential of your food blog.
As always, feel free to leave a question in the comment section below and I’ll do my best to follow up. If you’re a member of Food Blogger Pro you can hop over to the Generating Income forum to check in with other FBP members.
Thank you so much for this! As a complete novice to the potential of blogging and monetization, this helps breakdown the information into smaller, more “digestible” pieces-instead of being completely overwhelmed with it all! 🙂 Again, thank you guys!
Awesome! Happy to hear that it was helpful Meghan. Let us know if you have any questions as you build your blog. 🙂
I came here from your video for Ad Network Tracking. I am desperately looking for a tutorial on how to find and use passback codes in order to waterfall ad networks. Can you point me in that direction?
Hey Joe. It’s different for every ad network. Which networks are you using right now?
Thanks for getting back to me Bjork! This has been such an… um… adventure. 🙂 We use Adsense – Burst Media (our best currently) – Media.net – Sovrn – and we have an account with Rivit. I tried to figure out passback tags in DFP but always drew a blank and either I am not searching the correct terms in google or there just isn’t a lot out there when it comes to actual tutorials in how to set up passback tags. I appreciate any of your input. I know your time is very valuable.
If you’re just getting started I’d suggest using the passback ad code with the ad networks vs. using DFP. DFP is great if you’re running your own ads, but it’s probably best to just bypass it and use the ad networks’ passback area to create your waterfall. For example, here’s the passback (i.e. default) ad code care for sovrn (see image). Most ad networks have an area like this.
Thanks so much Bjork! This is very helpful! If I can’t find the locations for the passback tag on the other networks I will reach out to them. To make sure that I have this correct:
1) I place the code for the highest CPM (following the networks rules of placement and number of ad slots etc). directly on my site in the proper slot.
2) Place the passback code for second highest CPM network in the passback section of ad network #1 (for that specific ad unit)
3) wash rinse and repeat with other ad networks
4) (and most importantly) fill out the data in the spreadsheet you’ve created to make sure that I always have the highest CPM networks at the top of the waterfall.
Thanks for this high level definition of the various acronyms in the internet marketing space.
I want to confirm the CTR calculation though:
5 clicks / 1,000 page views = 0.05% CTR
shouldn’t that be 5/1000 = 0.005 –> 0.5% CTR not 0.05% CTR?
Thanks so much for catching that Michael! You’re 100% (1000/1000) correct. 🙂
Very helpful – Thanks!